By Carla C. Kirkland, Chan Cleveland

You will need to know some basic concepts of economics for the Praxis Elementary Education exam. Elementary economics examines the desire for, the manufacture of, and the sale and use of money, both locally and globally.

The teaching of economics includes concepts like wants versus needs, costs, and more thought-provoking topics, such as the following:

  • Natural, human, and capital resources
  • Supply and demand
  • Producers and production
  • Consumers and consumption
  • Taxation and spending
  • Inflation and recession

Teaching economic literacy, or the ability to understand how money works in the world, can help students understand how the payment of taxes works to keep roads safe, to repair bridges, and to pay for their schooling, for example.

Also, economics brings home the point that the shiny trinket in the store is a result of the use of natural resources, human labor, shipping, wrapping, and overhead. Basically, economics helps the student learn that sometimes people have to make choices based on needs rather than wants.

As you travel through the more complex economic ideas, you can discuss how people make decisions based on their economic status; how they use natural resources to build economic stability; and how rivers and ports help with trade. The end goal is to see that money, indeed, does make our world go round, whether we want it to or not.

Practice question

  1. A social studies teacher shares a graph with her class that shows how home heating costs rise in the local area during winter months because of the reliance on heating oil, a product that has risen in cost. Which economic principles can the teacher be demonstrating by the use of the graph? Check all that apply.
    A. Supply and demand
    B. Consumers and consumption
    C. Natural, human, and capital resources
    D. Inflation and recession

Answer and explanation

  1. The correct answers are Choices (A) and (B).
    This question requires that students have an understanding of the basic economic principles governing goods. During the winter months, when the demand for oil is greater, the supply decreases, creating a higher cost, hence, Choice (A). A discussion of the graph can also relate to the amount of money spent by households in an economy. It is usually measured on a monthly basis, hence, Choice (B). The answer is not Choice (C) because the graph does not explore natural, human, and capital resources. Only one type of resource, oil, is mentioned. The answer is not Choice (D) because in a recession (when businesses cease to expand), you would expect inflation (a general rise in the prices of goods and services over a period of time) to decrease. Neither of these is presented in the graph.